Loop Capital maintained its Buy rating on Regal Rexnord (NYSE:ZWS) Corp (NYSE:RRX) with a steady price target of $200.00. The firm's optimism follows a recent analyst event hosted by Regal Rexnord, which highlighted the company's potential growth and strategic initiatives leading up to 2025.
Despite current trends suggesting a performance in the lower half of the company's 2024 guidance, the stock is seen as attractive by the analyst.
Regal Rexnord's long-term earnings per share (EPS) growth target, referred to as LDD+, is deemed highly achievable by Loop Capital. The analysis indicates that over half of the expected growth can be attributed to controllable de-leveraging.
The remaining growth is expected to come from modest volume increases. This outlook is supported by several factors, including an improvement in product vitality, stronger vertical market exposure, and an enhanced go-to-market strategy.
The company's growth targets, ranging from low single digits to mid single digits (LSD to MSD), are considered feasible. These targets support the company's trajectory towards achieving $13-$14 in earnings power by the year 2027. Loop Capital's reiteration of the Buy rating and the $200 price target reflects confidence in Regal Rexnord's strategic plan and its execution.
Regal Rexnord's approach to growth is multifaceted, focusing on both internal improvements and market-driven strategies. The company's commitment to de-leveraging and organic growth is expected to contribute significantly to its financial performance in the coming years.
The endorsement from Loop Capital underscores a positive outlook for Regal Rexnord, as the company navigates near-term market challenges while setting the stage for sustained growth and profitability. The maintained price target of $200 indicates a belief in the company's value proposition and its ability to meet the outlined financial goals.
Regal Rexnord has been the focus of several analyst notes following its strong second-quarter performance. The company achieved a record adjusted gross margin of 38.1% and paid down $481 million in debt, with plans to pay an additional $900 million in 2024. Despite a 7% decrease in organic sales excluding Industrial Systems, Regal Rexnord anticipates positive top-line growth in the second half of the year and into 2025. This growth is expected to be primarily driven by low-single digit growth in residential orders.
KeyBanc, Goldman Sachs, and Baird have all reaffirmed their positive ratings on Regal Rexnord. KeyBanc maintained an Overweight rating and a price target of $190, highlighting the company's potential for long-term growth and its ability to manage debt effectively. Goldman Sachs maintained a Buy rating with a steady price target of $195, while Baird reaffirmed its Outperform rating with a price target of $213.
These recent developments underscore a promising outlook for Regal Rexnord, as indicated by analysts. The company's strategic actions, including both organic and inorganic growth strategies, are setting the stage for robust long-term earnings growth.
Regal Rexnord's management has also emphasized their progress in strengthening the company's long-term growth prospects.
InvestingPro Insights
As Regal Rexnord Corp (NYSE:RRX) continues to draw attention from industry analysts, real-time data from InvestingPro offers additional insights into the company's financial health and market performance. With a market capitalization of $11.03 billion, Regal Rexnord shows a notable presence in its sector. The company's revenue has grown by 14.21% over the last twelve months as of Q2 2024, underlining its capacity for growth amidst challenging market conditions. This growth trajectory is complemented by a gross profit margin of 35.78%, which indicates a strong ability to manage costs and maintain profitability.
Investors may also find the company's recent performance in the stock market encouraging, with a significant price total return of 11.33% over the last week and 16.57% over the last three months. These figures suggest a positive short-term investor sentiment and align with the InvestingPro Tip highlighting a strong return over the last week. Moreover, with analysts predicting profitability for the current year, there is a sense of optimism about Regal Rexnord's future performance.
For those interested in shareholder value, Regal Rexnord's long-standing history of dividend payments, which have been maintained for 52 consecutive years, offers a testament to its financial stability and commitment to returning value to its investors. The current dividend yield stands at 0.84%, with the last dividend ex-date recorded on June 28, 2024.
For further insights and additional InvestingPro Tips on Regal Rexnord, investors can explore the full suite of analytics and forecasts available at InvestingPro. Currently, there are over 8 additional tips listed on the platform to help guide investment decisions.
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